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Expecting the Unexpected
Know what to do when tragedy strikes.
By Gary Gerber, O.D.

While good for our consulting business, there's a certain type of phone call that we nonetheless dread receiving:

"I've recently become disabled and can no longer see patients."

"My husband passed away and I don't know what to do with his practice. Can you help me?"

Ready yourself for the worst

We can help, but we could've done more had these untimely incidents been anticipated. Human nature has us file things like this under, "It'll never happen to me." But as a consultant, I've seen that these things do happen quite frequently.

Are you and your family prepared for this type of unfortunate outcome? You undoubtedly have professional liability insurance, but do you have a game plan to protect you if a significant disability or extended interruption of business falls upon you?

Have the following items available for a trusted source to help cope with unexpected tragedies:

Insurance (life and disability). Not all of us have this, but I recommend it (especially disability) to everyone -- even those who don't have families. Several types of policies are available (e.g., those that will only pay if you can't perform any job or will only pay if you can't perform as an O.D.).

Your agent can adjust premiums up or down depending not only on the amount of insurance, but also on how soon it starts paying after you become disabled. Make sure someone reliable knows where the policy is and what it entails. Disability insurance is a good idea, as it pays for fixed expenses for a predetermined amount of time. In group/partner practices, it's not necessary unless you want coverage for more catastrophic loss such as a natural disaster.

If you have a group or partner in your practice, then consider getting disability buy-out insurance on him/them. That way, should they die or become disabled, insurance would cover the price of their equity in the practice. This makes any needed transitions easier and faster. Again, have the value of the practice drawn up in advance and have enough insurance to cover your partner's share of that price. (You can have this written up as part of the buy-sell agreement.)

Practice appraisal. A qualified, accurate appraisal can take some time to complete. After the death of a practice owner, the value of a practice may start to drop precipitously. Having to wait for an appraisal can cost the practice heirs valuable time and money. Instead, have your practice appraised at regular intervals and as above, make sure someone trustworthy and reliable knows where to find the appraisal.

Labor co-ops. Several areas of the country have optometry labor co-ops. Each doctor splits the time in the particular office based on a pre-determined and agreed upon formula. (Both parties also agree on compensation in advance.) Another particular to consider is whether the co-op, either collectively or its interested individual members, have the first right of refusal to purchase a practice that may become available.

Practice plan and manual. Having a practice plan and manual in your practice helps with the day-to-day running of a vibrant and healthy practice.

Give yourself some options

Let's hope that injury never happens and that death happens years from now, but if/when it does, make sure you're prepared by following some of these suggestions.

Dr. Gerber is the president of the Power Practice, a company specializing in making optometrists more profitable.  Learn more at www.powerpractice.com or call Dr. Gerber at (800) 867-9303.

Optometric Management, Issue: July 2004